Connecticut, cautiously, weighs potential for modern electric grid

Photo | Contributed

Katie Scharf Dykes, chair of the state Public Utilities Regulatory Authority, talks at a recent Connecticut Power and Energy Society panel discussion about eletric grid modernization. Joining her were Anthony Marone III, CEO of UIL Holdings Corp., (center), and Roger Kranenburg, Eversource's vice president of energy strategy and policy (right).

One of the smart meters installed by United Illuminating. The southern Connecticut utility says more than 70 percent of its customers have smart meters, which allow for more frequent data that helps UI forecast electricity demand and restore outages quicker, among other benefits.

Cell phone providers can easily account for every little bit of data you've used and how, in great, granular detail.

But another utility businesses and individual consumers use — electricity — is distributed on a system that's practically ancient by comparison. For the most part, utilities have no way of regularly measuring what most companies or homeowners are up to, beyond the number of kilowatt-hours they're consuming each month. Meanwhile, ratepayers also don't have a good way to monitor their own usage.

That will likely change in the future. The question is: how fast?

Policymakers, regulators, utilities and other stakeholders in Connecticut and around the country are grappling with how to plan for and implement a more modern — or "smart" — electric grid, which is the interconnected network that delivers electricity from producers to consumers. The vision is to use software, hardware and sensors to digitize a distribution system that was designed and built long ago, albeit with a few important upgrades along the way.

• Draw more of its power from non-polluting, intermittent sources like solar panels and wind turbines;

• Reduce energy use through pricing and incentive mechanisms;

• Reduce outages and restore power more quickly;

• Prepare — should the day ever come — for a phase out of fossil fuels in favor of electric vehicles and efficient electric building heating systems.

That latter change would drastically cut carbon-dioxide emissions, but also skyrocket demand for electricity, presenting major capacity challenges for electric grids that make it all the more important for utilities and regulators to prepare well in advance.

"This vision, this future of energy, … you start to see this conversation showing up in places we wouldn't have anticipated it, and being discussed with a sense of imminence and possibility from market players who see those waves coming," said Katie Scharf Dykes, chair of the Public Utilities Regulatory Authority. "Even just in the last year it's caused me to sit up a little straighter."

PURA, which regulates the state's electric, gas, water and telecom utilities and has the authority to order modernization investments, has been discussing those heady topics with local utilities Eversource and United Illuminating Co. (UI) and numerous other stakeholders this year, but Dykes says those conversations have only just begun, and there are plenty of challenges to overcome.

The debate is important to businesses, which already pay some of the highest energy costs in the country, because how and where they get their future power — and at what cost — could significantly impact their operations.

To achieve the vision of a modern grid, utilities are going to need to spend a lot of money and figure out how to operate under new business models, all while making sure their biggest task — keeping the lights on — is not imperiled.

There's also a concern about modernization costs and how much will be borne by ratepayers.

Utilities are urging a measured, deliberate approach.

"I think customers, the companies, we want predictability, we want to be one step ahead of what the customers want, not 20 steps ahead," said Anthony Marone III, the CEO of UIL Holdings Corp., parent of United Illuminating, who was on a recent panel discussion moderated by Dykes and hosted by the Connecticut Power and Energy Society.

Utilities will need to recoup their spending on modern new grid systems, industry officials say. As a result, regulators want to identify new revenue streams and cost savings for utilities that could help offset potential consumer rate hikes.

"We're going to be looking very, very carefully at the cost of these investments, but also just as carefully at the opportunities to maximize those dollars spent," Dykes said.

She said a spike in electricity demand from electric cars, while a technical challenge for the grid, could help utilities' diversify their revenue base, offsetting rate hikes to some extent.

"This could be of great benefit for ratepayers if we all plan for it," she said.

Marone's fellow panelist Roger Kranenburg, Eversource's vice president of energy strategy and policy, said besides the technical challenges of digitizing the grid, the biggest hurdle may be hashing out the financial aspects.

"Essentially, who pays and who benefits?" Kranenburg said. "Those are the really, really tough problems."

Seeing into the grid

One investment that's considered by many to be mandatory for modernization is installing smart meters, which can send and receive data from the utility company, allowing for more frequent usage data than the typical once-a-month manual meter read.

The meters can also:

• Enable utility engineers to operate the grid and forecast demand more efficiently;

• Allow customers to better understand their electricity use;

• Enable more advanced pricing structures that incentivize power consumption during times when demand is lower, relieving stress on the grid and potentially saving customers money on their monthly bills.

Dykes said there would be a significant price tag to rolling out smart meters across Connecticut's 1.6 million ratepayers.

"The costs are substantial," she said. "We've seen other jurisdictions put together [smart meter] proposals and not be ready to make the leap."

For example, Massachusetts this year delayed a planned smart meter rollout, slated to cost upwards of $500 million, due to various complications, though regulators there said they aren't dropping the effort, according to Greentech Media.

Connecticut ranks poorly when it comes to smart meter adoption, according to data from the U.S. Energy Information Administration.

As of last year, just 13 percent of electric meters deployed here were smart. That ranks the state 38th in the U.S.

United Illuminating Co. (UI), however, is ahead of the pack.

Of the company's 345,000 meters, more than 70 percent are smart, and the utility intends to reach 100 percent by early next decade.

The much larger Eversource is further behind — it has no smart meters installed to date, however, about 100,000 of its deployed meters can be converted to "smart" in the future.

Kranenburg said identifying the right time to invest in smart meters is an important financial decision.

"The [existing] meters are not fully depreciated. Can you make the case that you throw away that value and replace it?" he said. "Maybe not."

However, he said Eversource sees smart meters' potential.

"We definitely see all the functionality and definitely see all the advantages," he said. "It's not a matter of 'if,' it's a matter of 'when' … ."

Despite not having smart meters, Eversource said it's still able to adequately gauge customer usage and demand.

"As solar and other distributed energy resources on the grid increase, [smart meters] would help us deliver more reliable service to our customers," said Jennifer Schilling, Eversource's director of grid modernization.

UI's progress

United Illuminating began installing smart meters in 2010.

Benjamin Loebick, manager of smart meter systems operations in Connecticut for UI parent Avangrid, said there were a lot of financial benefits to offset the costs.

A big piece of the savings came from smart meters' ability to remotely shut off power when a tenant moves out, negating the need for the company to send out a truck to do it manually, he said.

Smart meters also help detect outages much faster and enable ratepayers to analyze their power use by logging in to a UI portal connected with the system. Smart meters could also eventually enable dynamic pricing that changes from minute to minute based on electricity demand. That type of rate structure can allow utilities to incentivize customer behavior to ensure the grid doesn't get overtaxed.